How effective are mobility subsidies in targeting the unemployed? Lessons from the Swedish Model, 1965–1975

Abstract

The Swedish Model on the labor market has been celebrated as a way to combine mobility with low unemployment and small wage gaps. As part of the model, relocation allowances were pioneered from the late 1950s. The program expanded thereafter and as much as 1% of the population in the high-unemployment north moved with assistance in the 1960s. Today, migration incentives are discussed to address pressing unemployment problems in Europe and the United States. What can Sweden’s experience tell us about the prospects of such programs? This article studies the usage of relocation allowances through a case study of Västernorrland County from 1965 to 1975. The analysis shows that there was a strong selection into the program by younger persons, recent graduates and from sectors with good employment prospects. The experience from Sweden highlights the difficulty of implementing programs to induce migration for those with the highest risk of unemployment.